Warriors near $2 billion bonanza
A wildly successful NBA super-team filled with pop culture stars playing in one of the most cash-rich markets is the perfect mix for the Golden State Warriors as the franchise heads toward a massive $2 billion in contractually obligated income when the Chase Center opens in 2019, a staggering figure that surpasses even the team’s early projections for the 18,000-seat facility.
While Warriors executives won’t disclose the specific amount of contractually obligated income, which includes short- and long-term financial commitments from the sale of sponsorships, suites and a “membership fee” for season-ticket buyers of their arena under construction in San Francisco, sources said $2 billion is in reach.
That would top the roughly more than $1.7 billion in contractually obligated income that sources said the San Francisco 49ers had when they opened Levi’s Stadium in nearby Santa Clara in 2014. It would also eclipse the nearly $1 billion in contractually obligated sponsorship sales at Mercedes-Benz Stadium when it opened in 2017.
Whatever the exact amount booked when the privately financed, $1 billion arena opens, Warriors executives claim it likely will set a new industry benchmark, a figure that should last at least until the Los Angeles Rams and Chargers open their shared stadium in Inglewood in 2020.
It shows the team is continuing to cash in on its four consecutive Finals appearances.
“My expectation is that when we open the doors, we will have more contractually obligated income between our sponsorship sales and suites sales that to date has ever been accomplished before,” said Rick Welts, president and chief operating officer of the Warriors. “Never underestimate the value of circumstances beyond your control. It is a special team in a special market in an extraordinary point in time. Nobody could orchestrate this.”
Brandon Schneider, Warriors chief revenue officer, confirmed that the team already has $1.7 billion in contractually obligated income, but he would not disclose the specific amount.
“It’s a perfect storm of a number of factors,” Schneider said. “There are the four consecutive Finals appearances, there is the product on the court and the team is fortunate to have corporate partners who want to be aligned with a good organization.”
Driving the revenue in the tech-rich Bay area market is the Warriors suites and premium-seating inventory that carry among the highest prices and the longest leases in the industry (see chart). A year ago, the Warriors began selling their premium-seating inventory, and to date all but two of the 32 courtside lounges have been sold and few of the 44 club-level suites remain. That despite the Warriors selling though a cluttered premium-seating market given the presence of Levi’s Stadium, AT&T Park and SAP Center in San Jose.
“I know the Warriors have had a ton of success,” said Al Guido, president of the 49ers and chief operating officer of Elevate Sports Ventures, a newly formed agency focusing on premium-ticketing sales, stadium licensing sales and corporate hospitality. “They are a juggernaut.”
In addition to the successful suite sales, the Warriors have signed 10-year founding partnerships with United Airlines, Accenture and Pepsi. Terms of the founding deals are undisclosed, but they are among the team’s most lucrative deals behind their naming-rights agreement with Chase and the team’s jersey patch partner in Rakuten.
Then there is the team’s unique season-ticket sales plan in the new building that includes a one-time, upfront “membership” fee for each seat that will be refunded in 30 years. Warriors officials won’t disclose the specific cost of the “membership” fee but reports have put the price at about $35,000 per seat, though the cost of the fee depends on seat location in the new facility.
The Warriors began selling season tickets in March and are reporting that the migration rate of current Oracle Arena season-ticket holders buying seats at the Chase Center is pacing between 75 and 80 percent, which Schneider said is outpacing the industry standard, new building migration rate of about 65 percent.
The season-ticket sales cycle is expected to take until the end of this year, with the team likely capping season-ticket sales at about 12,000 seats, though demand may increase the cap.
The team currently has 14,000 season-ticket holders at Oracle Arena and has a 44,000-member season-ticket waiting list. Demand is intensified at the new arena given that the seating capacity drops to 18,000 from 19,496 at Oracle Arena.
Just how many fans will pay a steep fee to sit in the upper reaches of the new arena remains to be seen. But the Warriors are confident in selling all season tickets and expect to add a few more founding partnership deals and other lower-level sponsors as arena construction moves toward completion.
As the Warriors move from being a tenant at Oracle Arena to running their own arena in San Francisco, the team expects to add about 100 new employees on the business side for a total staff count of about 300 people, with many of the new hires to work in arena operations, Welts said.
The project is more than 50 percent completed and is expected to be finished on time, if not on budget. When the arena opens, it will include an entertainment and retail district with the team operating the facility and booking more than 100 shows a year.
“We are now a sports and entertainment company that happens to have a pretty good team as a centerpiece,” Schneider said.